Jargon Buster for Buying and Selling Property
Our Residential Conveyancing team have put together a jargon buster of words and phrases used when you buy and sell houses and flats. From first time buyers to those who have not moved in years and need a reminder, here is our useful guide to the commonly used terms you are likely to hear throughout the buying and selling process.
|Boundaries||These define the perimeter of the property and its land and are usually marked with a ‘T’ sign on the deeds to represent fencing, walls or hedging.|
|Building Insurance||If you own your home, you need this insurance to give you financial protection in case the structure of your home is ever damaged and needs repair. The insurance will normally be calculated on the cost to rebuild the property, or on the full property value.|
|Chain||This is the term referred to for a sequence of individuals who are buying or selling their properties. The individuals are unlikely to know each other but become connected because the sale of one property becomes dependant on the purchase of another in the chain. For example, many sellers will not accept an offer from a buyer unless the buyer is already in the process of selling their property or they are a first time buyer with a deposit and mortgage agreed in principle. This scenario carries all the way up and down the chain of buyers and sellers. Some chains can therefore be very short. Others might only involve one buyer and one seller.
A good estate agent and solicitor will help you manage the chain by keeping in touch with the other involved.
|Completion date||This is the date on which your sale or purchase transaction is actually completed and you are officially the owner of the property.|
|Completion funds||These are funds you need to complete the purchase of the property you are buying.|
|Completion statement||This is a financial statement from your solicitor setting out the fees you need to pay to them in order to complete the purchase of your next property. Your solicitor will tell you how to transfer the money to them, after which they will handle the payments on your behalf.|
|Contract||This is a legally binding agreement setting out details relating to the buying or selling of a house or flat. The contract will include details such as the sale or purchase price, names of buyers and sellers and the property address.|
|Conveyancer||This is a licenced professional who manages the conveyancing transaction on your behalf. Our conveyancing team is led by fully qualified solicitors who specialise in residential property. They are also members of The Law Society’s Quality Conveyancing Scheme (CQS) which is a recognised quality standard for residential conveyancing practices.|
|Deeds||This is a legal document and an official record which sets out the description of a property, when the property was first registered and details the current owner. Some also cover details about boundaries and past owners.
HM Land Registry records are digital so they do not store paper title deeds. If you have original paper copies of property deeds, keep them in a safe place or ask your solicitor to look after them for you.
Very old properties may not be on the Land Register, and new build no long have paper copies, so if you have any questions about property deeds just ask us before you start to worry about where they are.
|Deposit||This represents the amount of money to be paid by the buyer to the seller on exchange of contracts. Deposits are usually a minimum of 10% deposit.|
|Disbursement||These are fees that buyers and sellers need to pay as part of a conveyancing transaction. Your solicitor will pay the disbursements on your behalf so will ask you for the funds in advance. Typical disbursements for property include stamp duty land tax (SDLT), searches, HM Land Registry fees and bank transfer fees.|
|Exchange of contracts||This is the penultimate step in a property transaction when the seller and buyer of the property agree to the terms by signing and exchanging contracts and committing to a completion date. By this stage you and your solicitor will have reviewed the contract and dealt with any questions.
Once contracts have been signed and exchanged they are legally binding and you must go through with the sale or purchase. It is also at this stage that the purchase deposit has to be paid and buildings insurance needs to be organised in preparation for the completion date.
|Freehold||With a freehold property you will be the outright owner of the house, any outbuildings and the land they sit on.|
|Land Registry Fees||These are the fees paid to HM Land Registry on completion, to register the property in your name.|
|Leasehold||With leasehold ownership you do not own the land on which your home sits and you only lease the building for a period of years which naturally reduces over time. Leases vary in length from as much as 999 years to those which may be running short and you would need to pay to extend so they do not expire during your time living in the property.
The land is still owned by the freeholder to whom you will have to pay ground rent and maintenance charges for the upkeep of communal spaces, usually via a property management company.
|Mortgage deed||This is an agreement between you and the mortgage lender based on how much money you are borrowing and how you will repay them. It is signed prior to completion and gives the lender the right to repossess your home if you do not keep up the with repayments.|
|Redemption fees||A redemption fee is an early repayment charge. It is payable to your mortgage lender (e.g. the bank or building society) when you clear your mortgage – which might be when you complete on the sale of a property and you use any profit to clear the debt.|
|Searches||Searches, or enquiries, are made by your solicitors on your behalf when you are buying a property. The results will tell you more about the property you are buying.
Typical searches include those with the local authority to check if the property is listed, in a conservation area or has a tree preservation order. The searches will also highlight planning proposals or issues and any proposals for new roads or transport networks. Environmental searches will reveal any problems with flooding, contamination or pollution. Water and drainage searches will tell you if the property is connected to the public water supply and sewers. And a search of the Land Registry will prove that the seller is the true owner of the property.
|Stamp Duty Land Tax (SDLT)||This is where a UK taxpayer, when buying a property must pay SDLT on a property purchase over £250,000. You will pay a percentage of the value of the property in tax based on the thresholds set by the government.
The tax has to be paid when you purchase a property so you need to include it in your moving budget. The tax thresholds are explained on the government website (and do change from time to time so it is worth double checking before you embark on a purchase).
They also have a helpful calculator which works out how much tax you will have to pay.
|Survey||This is a structural report produced by a building surveyor to ensure the property is valued correctly and structurally safe to live in.
Many mortgage lenders require a survey to be completed before they agree to lend you money. Although it is not a legal requirement it is strongly recommended that all buyers get a survey of any property they are buying from a qualified surveyor.
|Transfer document||This is formal document which confirms the transfer of legal ownership of the property from the seller to the buyer.
Your solicitor will organise this for you and provide you with a copy.
Here to Help
The process of buying and selling a house can be full of jargon and confusing language, even when a transaction is relatively straight forward. It is really important to understand the terminology – so please ask any of our conveyancing team to explain jargon or phrases so you can make informed decisions.
Please note the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.